Department of Civil Service

New York State Health Insurance Program: Overpayments for Services at the Mid-Manhattan Surgi-Center

In the New York State Health Insurance Program, the Department of Civil Service administers health insurance programs for active and retired State, local government and school district employees and their dependents. The primary such program is the Empire Plan, which provides services costing about $4 billion a year.

The Mid-Manhattan Surgi-Center is an eye surgery facility located in New York City. The Center does not participate in the Empire Plan. Accordingly, if an Empire Plan member is treated by the Center, the Empire Plan will not reimburse the Center for its full charges. Rather, it will only reimburse a portion of these charges (generally 80 percent), and the member will have to pay the balance. However, we found that the Center was routinely waiving Empire Plan membersí out-of-pocket expenses. Such a practice may constitute billing fraud, as the Empire Plan was reimbursing 80 percent of what it understood to be the Centerís actual charges. We recommended the Empire Plan recover the inflated portion of the Centerís bills, an amount we calculated to be $77,946 for the seven-year period we audited (about 21 percent of the total $370,782 that the Center billed to the Empire Plan during this period). We also referred the matter to the Department of Civil Service for appropriate follow-up action, because this billing practice results in other additional costs to the Empire Plan beyond the inflated portion of the bills, and should be actively discouraged.

For a complete copy of Report 2008-S-40 click here.